Northwest Honda’s GM Tony Carter and business managers Sam Baylasy (center) and Camille Kim (right) are putting information about F&I online to build trust with customers.

Northwest Honda’s GM Tony Carter and business managers Sam Baylasy (center) and Camille Kim (right) are putting information about F&I online to build trust with customers.

Despite new-vehicle sales closing in on historic highs, new studies that point to a retail model long overdue for an overhaul seem to be an annual affair for the automotive retail industry. The latest one was released during the 2015 National Automobile Dealers Association (NADA)/J.D. Power Automotive Forum in New York City on March 31.

“Change now while times are good,” Cox Automotive President Sandy Schwartz warned while revealing results of AutoTrader’s Car Buyer of the Future study. Among them was a stat that pointed to overwhelming discontent with the current car-buying model: Only 17 of the 4,002 consumers surveyed prefer it — less than 1%.

“Consumers are expecting more control and convenience in the car-shopping, -buying and -ownership experience,” Schwartz noted. “While there have been significant improvements in the way consumers can research and shop for vehicles, large portions of the buying and ownership processes have not really changed over decades.”

One of the study’s main conclusions is that consumers aren’t necessarily seeking an ecommerce-type environment. What they want is what the report called “connection commerce,” where shoppers can begin engaging sales departments online. And 70% of consumers polled said they prefer that type of connection with the F&I office.

Cox Automotive has examined the disconnect between dealers and today’s Internet shoppers in three separate studies since November 2014, the most recent one, released on April 22, singling out F&I as “one of the biggest parts of the buying process that has still not moved into the digital age.” The report, the 2015 Finance and Insurance study, also notes that the current F&I process, specifically the secrecy surrounding F&I product details, breeds skepticism.

And out of the 500 car shoppers and buyers polled for Cox’s F&I study, 63% said they would be more likely to buy F&I products if pricing and other details were available online. Camille Kim and Sam Baylasy, business managers at Washington’s Northwest Honda, know that stat isn’t farfetched, although giving their F&I offices a digital presence was driven by necessity, not consumer surveys. And they aren’t the only F&I pros attempting to move F&I online.

“The business office is an island, really,” says Kim, who has spent seven years in Northwest Honda’s F&I department. “It’s different than the rest of the process, so I think the old-school method is to just keep it a secret. But my thinking is, if we’re proud of our products, we’re going to show everybody everything and be really transparent. Why wouldn’t we want everyone to know about them ahead of time?”

First Take
Northwest Honda is located in Bellingham, Wash., a small city located nearly four hours from Seattle on the Canadian border. Two years ago, in order to expand its customer base, the dealership started putting its used inventory online in an attempt to attract out-of-area customers. The move drove the store’s F&I team and Internet Manager Stephanie Akers to take a novel approach to F&I starting last year: posting short YouTube videos, shot by and starring staff, about the dealership’s F&I products and process right on the dealership’s website.

Northwest Honda is now averaging about five vehicle sales a month off its website to out-of-area customers. “It’s not huge numbers, but it happens,” says General Manager Tony Carter. “We just recently had a customer from Alaska. We’ve shipped cars to California, Montana, wherever.”   

Carter admits very few of those online sales included F&I products. “It’s really hard to try to sell those customers any products out of the finance department over the phone,” he says.

But that has started to change since the dealership began a push to put more information about its F&I products and process online, a charge led by Kim.  

Northwest Honda’s Camille Kim started shooting videos about the dealership’s F&I products and process last September.

Northwest Honda’s Camille Kim started shooting videos about the dealership’s F&I products and process last September.

Step one, Kim says, was to flush out the finance tab on Northwest’s website. Now, users will find bios and photos of Kim and her partner Baylasy, a list of frequently asked questions, customer testimonials about the finance process at Northwest Honda, a credit application and a description of available F&I products.

“After [Carter] gave me permission to work on the finance section of our site, I wrote out the frequently asked questions section and asked some clients to write some reviews,” Kim says, adding that she got the idea while attending an American Financial & Automotive Services workshop taught by F&I trainer Tony Dupaquier. “Then I wrote up a description of each product we sell and worked with our IT specialist to get it up and running.”

The finance tab’s drop-down menu now includes a payment calculator tool, current Honda lease incentives, a pre-approval form and Kim’s pet project — the video gallery. The dealership posted its first finance video to YouTube in September 2014, a 40-second clip of Kim introducing herself and explaining the advantages of a biweekly payment program.

“I want customers to be able to click on every product to open up to either a video or some type of presentation of the product,” Carter says. “That’s our ultimate goal.”

Ready, Action
Kim describes Northwest’s foray into video as a “work in progress.” At first, she and Akers were shooting videos on a cellphone, but “slowly, over time, we’ve tried to perfect them and make them more professional,” she says. The videos are a mix of product information and glimpses into how the F&I process works at Northwest Honda.

But part of that process has changed since Kim started posting her F&I videos to connect with online shoppers. Now, once a deal is reached with an Internet shopper, the dealership emails them the necessary documentation. Kim or Baylasy then follow up with a phone call to talk them through the paperwork and their F&I options.

“That’s been really, really successful,” Kim says. “It’s a little out of our comfort zone, but actually, instead of selling [F&I products] on one or two out of 10 deals, we’re selling them on about 50%. So it has had a pretty positive effect on that type of transaction.”

“It’s made huge difference,” Carter adds.

In the past year, the dealership has raised its average F&I profit per vehicle retailed from around $1,000 to more than $1,200. Kim notes that service contracts are the main focus, especially when it comes to online used-car sales. And according to the finance manager, the penetration rate for that product has leapt from 39% to around 53% during the same period.

Kim is also seeing another unexpected result: A surge in trust from her customers. The finance manager has plenty of anecdotes to share about car buyers who decided to buy F&I protections because they had seen her videos and felt like they knew her.

“It might be a small risk, in that the customer may have a preconceived notion about you and the products,” Kim explains. “But I think that when they’ve already seen what you have to offer, it’s a little bit easier to break down the prejudice about the business office. That’s one of the reasons I wanted to try something new — it’s not really respectful to expect the customer to spend more money when they don’t even know what we have to offer.”

Trust Factor
According to Cox Automotive’s F&I study, 61% of consumers polled said they believe F&I products are just ways for the dealer to make more money, while 48% said they would never buy anything other than the car from a dealership. But the resistance, the study found, is not about the products themselves, with 84% saying they believe F&I products have real value — 66% indicating that they think F&I protections may save them money in the long run. The problem is the experience.

Then there’s this stat: 46% of the F&I study’s respondents who claimed to be familiar with a service contract did not select the correct definition. The study also found that 56% of consumers who claimed familiarity could not correctly identify the definition for prepaid maintenance.

The industry has taken note, with companies like Dealertrack looking to help bridge the information gap. At the 2015 NADA Conference & Expo, the firm unveiled MenuDriver, a new website widget that allows dealers to post details about their F&I products on their websites.  [PAGEBREAK]

Business managers Camille Kim (left) and Sam Baylasy (right) sell F&I products to about half of the out-of-area customers who buy cars online from Northwest Honda, thanks to a recent process change and a push to put F&I online.

Business managers Camille Kim (left) and Sam Baylasy (right) sell F&I products to about half of the out-of-area customers who buy cars online from Northwest Honda, thanks to a recent process change and a push to put F&I online.

“One of the things we’re sensitive to is not eroding dealer margin,” Senior Director of Product Management Pete Batten said of the tool. “So now the shopper can look at the F&I products and understand the benefits, and what they select gets sent to the dealership [when they submit a deal].”

Even F&I product providers like Norcross, Ga.-based EasyCare have ventured into the software solution arena to help F&I offices connect with Internet shoppers. In 2010, the company acquired an email video tool called Covideo. One of the solution’s most prolific users is Mike Casisa of Southern Chrysler-Jeep in Chesapeake, Va. He began using the tool two years ago to gain customer trust.

Covideo allows users to quickly shoot a video from a mobile device or desktop computer equipped with a camera, and then drop it in a customized email template. According to EasyCare, video email marketing can increase click-through rates by as much as 96% — a claim Casisa has no doubts about.

“Ninety to 95% of the Covideos I send out are viewed by the customer,” Casisa reveals. “That’s something that’s neat about Covideo — it tells me when the customer viewed it and how many times they viewed it. Once I see they’ve looked at it, I wait about 30 minutes to an hour and then give them a call.”

The template Casisa uses is customized to include links to information about EasyCare’s service contract, a credit application, inventory and service. The branded template also contains logos touting the dealership’s MotorTrend and Better Business Bureau ratings.

“And when I do Covideos, of course I wear my shirt with a dealership logo,” Casisa says. “The customers clearly know it’s coming from our dealership.”

Unusual Tactics
Casisa has a very specific use for Covideo: selling EasyCare service contracts to the dealership’s service customers. The finance director uses a data mining tool called AutoAlert to keep abreast of service appointments. If he spots customers who are about to run out of warranty coverage, he sends them a video of him explaining how much warranty coverage they have left on their vehicles. The extra effort nets an additional 10 to 15 sold service contracts each month.  

Mike Casisa of Southern Chrysler-Jeep uses Covideo to tell customers when their warranties are nearly up

Mike Casisa of Southern Chrysler-Jeep uses Covideo to tell customers when their warranties are nearly up

“In the finance department world, that’s big because these are service contracts that nobody counted on ever selling,” he says, noting that he began aggressively pursuing F&I product sales out of the service department three years before he tried Covideo. “There’s just so much business in a service department that finance people don’t think about: people who didn’t buy a VSC, people whose warranties are going to expire.”

Currently, Casisa’s acceptance rate on service contracts sits between 70% and 80%. “And a lot of that high penetration has to do with being able to sell VSCs out of [the] service [department] — so VSCs to customers who are not buying cars,” he says. “There were months in the past where I’ve hit 90, 95% [penetration].”

Salespeople at Southern Chrysler-Jeep also use Covideo to send video walk-arounds to customers requesting information on a specific vehicle. And the service department uses mobile devices to show customers what parts on their vehicles need to be repaired.

“From a service point of view, a mechanic can use the free Covideo app on their phone to show a customer what their brakes are supposed to look like and what their actual car brakes look like,” Casisa says. “To a customer, that would hold a lot more merit than just a phone call.”

Quick Take
When it comes to video, Casisa likes to keeps things brief. A typical Covideo email from the finance director includes a quick introduction, followed by a date when the customer’s warranty or service contract is set to expire. Casisa also tells the customer to ask for him at their next service appointment, and includes his phone number.

“I’m not trying to sell [service contracts] through Covideo,” he says. “I’m just trying to give the customer enough information to keep them interested; so that way they have to talk to me. I tell them there are different terms that are available … and to contact me about the pricing.”

At Northwest Honda, Kim and Baylasy employ a similar approach to their informational videos about F&I products. “We have different companies that we go through, so I try to keep the videos a little more vague, as opposed to just focusing on an actual company,” Kim explains. “But we’ve tried to do a video on each type of product.”

Despite her team’s online success, Kim doesn’t think a video or website is going to replace the interaction between F&I managers and customers. “Everything is great via email, but you really don’t get a feel for how the dealership’s going to serve you if you don’t get on the phone or come in person,” she says.

And despite Cox Automotive President Sandy Schwartz’s call for change at the 2015 Automotive Forum, some stats from AutoTrader’s Car Buyer of the Future study were heartening for dealerships behind the digital curve: 84% of consumers still prefer to buy vehicles in person.

But as Northwest Honda discovered, it doesn’t hurt to try something new. “We’re willing to stand out and be different,” Kim says. “It’s a good way to make sure we’re not dying off as we move forward into the future as a department.”

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